Development and construction experts warn regional water issue ‘will decimate our industry’

As the Region of Waterloo continues to grapple with a future water capacity shortage, a committee of regional councillors heard a development freeze has sent shockwaves through the local economy.

Water capacity concerns for the Mannheim Service Area came to light in December 2025. Although there were no immediate shortages for residents, officials said there wouldn’t be enough water to support one million residents, a population the region is expected to reach by 2051.

In January, Waterloo Region officials said they couldn’t support new developments until additional water sources were identified.

• TIMELINE: Water capacity concerns in Waterloo Region

On Tuesday, the region’s Sustainability, Infrastructure and Development Committee heard from developers and construction groups who said the development freeze could lead to layoffs and, in some cases, cause the entire loss of some projects.

“I’m worried that if we don’t have a solution within the next few weeks, to at least lift some of these permits that are held right now, come fall is when we’re going to have a real problem, which is when the layoffs will start happening in this area,” Scott MacDonald, president of Dean-Lane Contractors Inc. said. “That’s very concerning for me. I don’t know if I can build the crew again if we can’t keep it going. It’s so hard to do that, and to do it in this region would be hard.”

Committee members were told discussions about the water shortage had stretched beyond the region’s borders.

“At the ICSE convention, which was an industry convention for real estate developers, from all over Canada and the U.S. it was a topic – Waterloo Region application pause was a topic of discussion. I think that gives you a pretty good idea of how far reaching and how powerful this stigma is,” Joe Benninger, vice president of CBRE said. “We lost a 15-acre industrial land deal when the lender pulled the financing on a planned operations expansion by a local employer, specifically because of the uncertainty due to the Mannheim water issue. Secondly, a long-term care operator that we were working with who was focusing on a site in the region to build a 256-bed facility has dropped that deal and is now exploring other municipalities outside of the region.”

Other delegates worried about the potential impact on jobs related to construction and development.

“If you look at Bruce Nuclear, they’re looking at significant expansion, no question about it. And in the meeting, it was said that there will be no electrician jobs in Kitchener Waterloo in the near future. So, they will be able to pull everybody out and move it through. That will decimate our industry,” Jeff MacIntyre, president of the Grand Valley Construction Association said.

The Waterloo Region Home Builders’ Association told the committee the freeze has put projects at risk, along with more than 24,000 construction jobs.

“The Greater KW and Cambridge Chambers of Commerce have already advised that the freeze effectively hangs a sign on Waterloo Region that says, ‘Closed for new business,’” Larry Masseo, Waterloo Region Home Builders’ Association’s policy advisor, said.

Delegates from both industries asked the region to keep them involved and informed on solutions.

Environmental concerns

Concerns about development weren’t the only issues raised during the meeting.

Some delegates urged the region to protect groundwater, citing environmental concerns. In particular, they worried about the Waterloo Moraine, a significant source of the region’s drinking water.

“Your own third-party report is blatantly clear, stating on page three that in 2023, 2024 and 2025 unsustainable levels of water was pumped from the Waterloo Moraine, lowering aquifer water levels faster than they can be replenished,” Kevin Thomason, vice-chair of the Grand River Environmental Network, said.

A hydrogeology group told the committee they don’t believe there is a groundwater issue, but instead treatment isn’t happening fast enough, and the model the region is currently using isn’t the right way to do it. They argued the real numbers would show there’s enough capacity to approve projects right now.

Regional staff said it’s more complicated than that, and said the area has seen average water demand higher than what’s sustainable.

Last week, Region of Waterloo council agreed to fund a plan that would temporarily increase water treatment capacity at the Mannheim Water Treatment Plant.

The committee also approved several motions during the meeting.

Councillor Joe Gowing suggested a formal review of the groundwater supply to find means of long term protection, which the committee approved.

Then, the committee approved a motion from Councillor Berry Vrbanovic that would see Waterloo Region work with municipalities on a risk-based approach that could allow up to 50 per cent of the development projects that are planned for the next five years to continue.

The committee also asked regional staff to draw up a report to clarify the suggestions regarding the capacity constraint that were brought up during the meeting. That report is expected to be presented later this month.

Also at committee, members agreed to rescind a 1980 agreement with the Township of Wilmot that limited how much water could be drawn from Wilmot. This will allow more water to be shared with the Mannheim area. Wilmot Mayor Natasha Salonen told her regional colleagues during the meeting there is enough water for this to happen, but she told township councillors on Monday night that she hopes it will be temporary.

All the decisions still need to be ratified during the next full regional council meeting.